MacArthur Awards $2.8 Million to Support Research on How Housing Matters

Published October 23, 2013

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The MacArthur Foundation today announced six grants totaling $2.8 million for research to explore the ways housing may affect social, health, and economic outcomes of children, families, and communities. Recipients will utilize and connect existing data sets – such as Medicaid, utility, and school data – to reveal insights into the effectiveness of housing policies and related public programs.

With these new grants, MacArthur has supported 42 studies over five years with important implications for a new generation of housing policies. The new research will inform timely policy discussions on topics ranging from how the housing market boom and bust is affecting public finances and cities’ ability to promote safe, stable neighborhoods, to the effectiveness of federal mortgage payment assistance to families experiencing unemployment. Other projects will examine residential energy usage in government-assisted housing, explore whether healthy housing improvements can reduce Medicaid expenditures, and identify how housing experiences in early childhood affect school readiness and early literacy.

Selected through a competitive process from a pool of more than 300 proposals, the six grants complete the Foundation's five-year, $25 million research investment in the How Housing Matters to Families and Communities initiative. Included in this investment is support for a research network conducting a long-term, multi-city, mixed-methods study led by an interdisciplinary group of scholars.

"MacArthur-supported How Housing Matters research has already revealed that stable, quality housing matters in ways critical for children's emotional and physical development, improves school performance, and diminishes psychological stress,” said Julia Stasch, MacArthur’s Vice President for U.S. Programs. “Future research findings will arm policymakers and practitioners with evidence of what works and what does not, which is vital to drive innovation and more effectively target scarce resources to meet the housing, social, and economic needs of families and communities.”

In 2008, MacArthur set out to explore if and how having quality, stable, affordable housing promotes positive outcomes in education, employment, and physical health, among other areas. As government continues to face severe budget constraints, needing to do more with less, the effort seeks to determine how housing programs and investments may be better-designed or integrated with other policy interventions to realize a greater social return. View all past recipients of How Housing Matters research grants.

The Housing Market and the Fiscal Condition of America’s Central Cities

Background: The collapse of the housing market, combined with the Great Recession of 2007-2009 and the sluggish recovery, have had substantial consequences for the fiscal health of the nation’s largest central cities. We propose to explore the linkages between changes in housing prices, foreclosures, and other developments in the housing market, and the fiscal problems facing 112 large central cities. We will also investigate how fiscal decisions of cities in response to the pressures engendered by the housing market collapse impact the ability of cities to promote safe and attractive neighborhoods and well-functioning housing markets.

Using fiscal data through 2009, previous work by two of the PIs identified substantial lags between changes in housing prices and changes in tax revenue. This project builds on that work using data through 2012 and richer data on central city housing markets, including RealtyTrac data on foreclosures. The research will offer new insights into the importance of housing to city public finances, which, in turn, are vital to a well-functioning housing market, particularly for lower-income residents.

Design: To account for the great variation in fiscal structures that characterize America’s central cities, the PIs develop fiscally standardized cities (FiSCs): a comprehensive accounting of all the revenues and expenditures of each central city municipal government, and of that portion of independent school districts, county governments, and special districts that overlay municipal boundaries. The PIs will construct a database that adds detailed housing, economic, and demographic data for 112 of the nation’s largest central cities to the fiscal data. These data will be used to explore relationships between changes in the housing market and changes in property tax revenues, and between housing market developments and the pattern of government expenditures in FiSCs.

Outcomes: The research will identify both revenue and expenditure policies that have been most successful in enabling cities to maintain public services, including housing programs, in light of the Great Recession and the recent upheavals in the housing market. Among central cities whose fiscal health has been most impacted by developments in the housing market, the PIs will investigate what fiscal and housing policies will enable these central cities to recover most quickly. The target audience for the research includes local, state, and federal government officials, and non-profit and private-sector organizations with an interest in the wellbeing of city residents, and in the vitality of central city housing markets.

Leveraging Integrated Data Systems (IDS) to examine the Role of Housing and Neighborhood Conditions on School Readiness and Early Literacy

Background: In many big cities, substantial numbers of children enter kindergarten already well behind in their educational progress, presenting a major challenge for public education systems. While it is generally acknowledged that the environment in which children spend their early years is crucial, little is known specifically about how housing conditions in children’s own homes and the immediately surrounding areas factor into the problem of school readiness and early learning.

Drawing on two integrated data systems (IDS), one covering children and the other covering properties, this longitudinal, population-based study has two main purposes:

Examine the influence of housing experiences and conditions on school readiness and early literacy for all children entering kindergarten over a four year period in a big city school system (Cleveland OH)

Demonstrate the cost-effectiveness of using integrated data systems that link data on both individual children and residential properties to investigate housing policy issues.

Design: The study will draw on two relatively unique data resources: 1) The Childhood Integrated Longitudinal Data (CHILD) System that links health, social services, early childhood programs and K-12 education data for all children in Cuyahoga County; and 2) The Neighborhood Stabilization Team (NEO CANDO-NST) integrated parcel information system that links data on housing conditions, values, land use, mortgage originations, sales, foreclosure filings and auctions, vacancies, code violations, demolitions, tax delinquencies, and crime reports for all properties. The property information is linked to child information via all of the child’s home addresses over the first 8 years of life. The study includes all children that entered kindergarten in the Cleveland school district between 2007 and 2010.

Outcomes: This study will highlight the necessity of considering housing as a platform for school readiness. In the short term, it may demonstrate that the value of public investments in “big data” can be enhanced through linkages with housing and property data systems at local and state levels. The study may also expand the debate about federal programs for neighborhood stabilization from a narrow focus on how foreclosure prevention, demolition and rehabilitation can affect housing values to how they can affect young children.

Irrational Exuberance at City Hall: Local Government Resilience during Housing Booms and Busts

Background: Expanding access to decent housing and neighborhoods depends critically upon the fiscal well-being of local governments such as cities and counties, because they bear responsibility for basic services such as police, fire, streets, parks, housing, and schools. Local governments were hit hard in the Great Recession, as real property tax revenues fell and states cut back on local aid. Importantly, the housing boom may have led many local governments to make poorly reasoned, overly optimistic spending decisions intensifying the recession’s impact. This project will evaluate the determinants of local financial resiliency, and weakness, when housing market conditions change drastically. It will examine how “irrational exuberance” may have imperiled the financial condition of local governments and detail the tempering influence institutional and political features played upon risky spending associated with temporary increases in housing wealth.

Design: This study will adapt theoretical models from the household consumption and urban public finance literature, and test hypotheses with several sets of econometric models. In order to best leverage different levels of detail available for certain measures and some regions, researchers will analyze different samples of cities. The project builds on existing work that seeks to gain a deeper understanding of the local “fiscal policy space” (Pagano and Hoene, 2010) to describe institutional and political characteristics of cities. Lastly, researchers will create indices of house-price change for each incorporated city in the United States using transaction data from county tax assessors to more precisely measure local booms and busts.

Outcomes: Enhanced understanding of how existing systems for assuring stability and solvency in local governments failed during the years leading up to the crisis is essential to avoid demands for abrupt local austerity in the future. This research aims to construct a taxonomy of improved fiscal practice and contribute toward the programs now underway in many states providing better local financial oversight and, in some cases, intervention.

Background: Low-income people and communities across the United States suffer disproportionately from the negative health effects of poorly constructed, unsafe and substandard housing. A number of research studies have documented these negative effects, which include asthma and other respiratory illnesses, cardiovascular health problems, increased stress, and adverse overall physical and mental health status. In addition to affecting the quality of life for low-income people, these health problems also place a significant burden on the health care system.

The cost of creating healthy housing is borne by the housing industry, yet the benefits accrue to the health care industry through prevented or reduced illness and injury. To date, the health care benefits of healthy housing have not been quantified, limiting the ability of the housing sector to make a compelling business case for health care investment in housing. This study will monetize the value of integrating healthy housing improvements into the development and rehabilitation of affordable housing.

Design: This cost-benefit study is nested in the larger, separately funded Enterprise Community Partners study, a prospective controlled trial of healthy housing improvements being conducted in three cities (New York City, Cleveland, and San Francisco). The Enterprise study examines asthma- and other health-related outcomes in three waves, collects data on the cost of implementing a standard set of healthy housing improvements, and tracks indoor and outdoor environmental data. It is funded by The JPB Foundation with additional grant support from the Kresge and Wells Fargo Foundations. Funding from the MacArthur Foundation enables documentation of the impact of the participant’s health care utilization on Medicaid costs using standard cost benefit analytical methods.

Outcomes: If, by demonstrating that reductions in government spending on health care can be achieved through housing improvements, the study may provide important evidence to support investments in “housing as a vaccine.” Research findings will have policy implications for how both voluntary guidelines and regulations covering building, housing, energy and health codes and laws are developed.

A Multistate Study of Housing and Employment Impacts of Foreclosure Prevention Programs

Background: The housing crisis that began in 2007, coupled with high unemployment in the labor market, left millions of homeowners at risk of foreclosure and impeded overall economic recovery. Federally-funded foreclosure mitigation programs for delinquent borrowers in the form of housing counseling or mortgage modifications have shown mixed success. By contrast, foreclosure prevention programs targeted at unemployed homeowners may have stronger impact, providing temporary mortgage stability even before delinquency, allowing time to secure employment and avoid the dual problem of financial and housing instability. This research analyzes one such program: the Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets (or “Hardest-Hit Fund”), representing a combined $7.6 billion federal investment over seven years.

Explore the spillover effects of housing stability on employment stability.

Design: The study will use homeowner-level administrative data from multiple states awarded “Hardest-Hit Fund” dollars; assessor and recorder information about owner-occupied properties purchased from DataQuick; loan-level First American CoreLogic (CL) servicer data; and individual-level unemployment and wage data. Analyses will utilize a variety of econometric modeling techniques, including a proportional hazard model that will examine the factors influencing the duration of unemployment and probit models that measure the impact of assistance receipt on future mortgage status. Ordinary regression models will be used to assess the impact of assistance on future wages.

Outcomes: This research is uniquely positioned to directly inform policy, as this important foreclosure prevention program is being implemented in direct partnership with state housing finance agencies (HFAs). The findings will be of interest to HUD, nonprofit housing counseling organizations, state HFAs, the Federal HFA, Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and the U.S. Department of the Treasury. The findings should also inform efforts to develop more effective standards for servicing distressed loans.

Background: The untapped potential of energy efficiency upgrades to the affordable multifamily housing stock has received much attention in recent years. In addition to environmental benefits, improved energy efficiency leads to lower operating costs, thus benefitting owners operating a business with a thin margin, low-income tenants with little money to spare for high utility bills, or both. In a number of studies, tenants have reported that high utility bills make it difficult for them to pay for rent and other household necessities and to maintain stable housing. However, little research exists that measures actual energy consumption in subsidized housing, tenant energy burdens, or the mobility of tenants struggling with high utility bills.

This research explores three questions:

How energy efficient is the current stock of affordable rental housing?

How do energy bills affect tenants’ financial and residential stability?

Design: This project will use household-level tenant and utility data to assess the energy efficiency of the existing subsidized rental housing stock in Florida; identify the property, household and subsidy characteristics associated with higher and lower energy consumption and costs; study the impact of energy costs on tenants’ real gross rent burdens and residential mobility; and explore geographic patterns of energy consumption to examine potential tradeoffs between energy efficiency and location efficiency. The research team also will examine energy consumption data for in hundreds of recently retrofitted multifamily units in Florida to determine whether the upgrades resulted in reduced energy consumption and, if so, whether these benefits persist in the months and years following the retrofit work.

Outcomes: The resulting research will provide concrete data on the energy efficiency of the existing assisted housing stock, the effects of high utility costs on tenants, and the potential of multifamily retrofits to deliver true and lasting energy savings. The research is intended to provide practical information on the value of retrofit techniques to utility companies and multifamily owners, to evaluate the case for the inclusion of multifamily housing in initiatives such as utility-sponsored efficiency programs, and, conversely, to evaluate the case for the inclusion of energy efficiency incentives and retrofit financing in low-income housing programs.